Dangote Refinery Africa’s biggest refinery takes shape

The completion of Dangote Refinery in 2019 will mark another milestone in the Nigerian oil and gas industry as the $11 billion refinery hold the prospect of stopping of refined petroleum products by Nigeria.

The Dangote Refinery will produce 650,000 barrels per day of refined petroleum products to meet all the country’s refined petroleum products needs as well as export to other countries.

Nigeria spent N2.59 trillion to import refined petroleum products in 2016, according to the Nigeria Bureau of Statistics. founder of Dangote Group of Companies and the richest man in Africa.

Dangote, the promoter, said that the refinery projects were primarily meant to diversify the resource base of Nigeria.

“This is the biggest industrial site anywhere in the world from the fertiliser, petrochemical and refinery plants. The Dangote Refinery will produce 650,000 barrels per day of refined petroleum products to meet all the country’s refined petroleum products needs as well as export to other countries.

Nigeria spent N2.59 trillion to import refined petroleum products in 2016, according to the Nigeria Bureau of Statistics.

The refinery is being built by Alhaji Aliko Dangote, founder of Dangote Group of Companies and the richest man in Africa.

Dangote, the promoter, said that the refinery projects were primarily meant to diversify the resource base of Nigeria.

“This is the biggest industrial site anywhere in the world from the fertiliser, petrochemical and refinery plants.

“Our refinery will be 1.5 times the capacity of all the existing four refineries in the country even if they are working at 100 per cent capacity.

“This is the single largest refinery in the world. The petrochemical that we have is 13 times bigger than the Eleme Petrochemical built by government,” Dangote said.

Vice President Yemi Osinbajo described the project as an incredible industrial undertaking, the largest and most ambitious on the continent.

The Dangote Refinery is an integrated petro chemical complx. Apart from refining crude oil to petroleum products, it will also have petrochemical and fertiliser plants. Mansur Ahmed, an Executive Director in Dangote Group, said that the petrochemical plant would process 1.3 million metric tonnes per annum of petrochemical products.

The fertiliser plant will produce 2.8 million metric tonnes of assorted fertiliser, while the gas plant will produce three million cubic metres of gas per annum. The refinery will also have the largest sub-sea pipeline infrastructure in the world with capacity to handle three billion cubic metres of oil annually.

The project is located in Lekki Free Trade Zone on a vast land mass of 2,200 hectares, an area eight times bigger than the entire Victoria Island in Lagos. According to Mansur, the first phase of the plant will be ready by the end of 2017, the second phase by the end of 2018, while the third and the commencement of the refinery will be in 2019.

It is regrettable that Nigeria with large crude oil reserves and being the largest crude oil producer and exporter in Africa and eighth in the world, still imports more than 80 per cent of its petroleum products needs.

The country often experienced fuel shortages due to the poor state of its refineries. All the three refineries, operated by NNPC, are producing far below their installed capacity. The Port Harcourt Refinery has capacity to produce 10.500 million mt/y (metric tonnes per year) of refined products, but it is producing at less than 20 per cent of this capacity.

The Kaduna Refinery, built in 1980, has capacity to produce 5.5 million mt/y (110,000 b/d), while Warri Refinery, built in 1978, has capacity to produce 6.2 million mt/y (125,000b/d) of refined products.

It is, therefore, good news that Nigeria will now host one of the largest refineries in the world after the Jamnagar Refinery in Gujarat, India which is the, largest refinery in the world and produces 1,240,000 barrels per day.

The Dangote Refinery will be the biggest in Africa taking over from the South Africa’s Sapref Refinery producing 180,000 barrels per day and Cairo’s Mostorod Refinery with a capacity of 142,000 barrels per day.

Dangote has already provided $7 billion in equity out the $14 billion estimated total cost of the project. Some Nigerian banks provided a syndicated loan of $3.3 billion for the project. The African Export-Import Bank (Afreximbank) has also promised to assist the Dangote Group to access foreign exchange and funding for the project.

Dr Okey Oramah, its President, gave the assurance during a tour of the project with the bank’s board members in 2016. Oramah said that the board members decided to visit Dangote group to assess the project for possible financial assistance.

He said that Dangote Group was making tremendous impact across the continent which included Tanzania, The Gambia, Zambia, Niger and other parts of Africa.

“We are supporting them in what they are doing in those countries, so we are equally supporting them in this ongoing project, so it is important for the Board of Directors of Afreximbank to pay a courtesy visit to the site.

“It is important to come and see firsthand the project that is ongoing because we are also planning to support them to ensure the project is delivered on scheduled. “

We are looking at providing all necessary support both financial and otherwise to ensure that the project is completed within the time frame.

“We are also looking at providing support widow for Dangote group that will be used to fund its projects to completion.

“The impacts of the projects are not going to be felt in Nigeria alone but across Africa, especially West African. So for us it’s a strategic partnership we are building.

“If we help them to impact lives across the continent, they will equally help in delivering on our mandate to meet the objective of Afreximbank,” Oramah said.

Some other private investors are still visiting the project site to evaluate the facilities with the prospect of investing in the project. The likely benefits of the Dangote Refinery to Nigeria are diverse.

Dangote said that the project would save the country about $7.5 billion annually in foreign exchange being used to import petroleum products and also generate $5 billion foreign exchange earnings annually.

The plant, according to him, will generate over 100,000 employment opportunities and revive over 11,000 filling stations that had been shut due to shortage of products. Dangote said that the refinery would crash the price of petrol products in Nigeria as the products would be refined locally and save some costs incurred in importation.

He urged the Federal Government to sincerely pursue the diversification programme, stressing that projects like the refinery were needed to wean Nigeria from heavy reliance on crude oil export.

According to him, the best way to diversify the economy is through agriculture and “our fertiliser plant is in line with that goal”.

“By the time we finish out gas pipeline, it can generate about 12,000 mw and we can export gas to other African countries.

“We would have the capacity to store four billion litres of products and can load 2,680 trucks per day”.

Dangote said the target was that in five years time, half of Nigeria’s crude oil production would be refined and exported rather than exporting crude that were creating jobs elsewhere.

The Lagos State Governor, Akinwunmi Ambode, said the project would create some 235,000 jobs both directly and indirectly. He said the project would boost the economy of Lagos and entire Nigeria through its multiplier effects.

Mr Chinedu Okoronkwo, the National President of Independent Petroleum Marketers of Nigeria (IPMAN), described Dangote Refinery as a welcome development. He said that the refinery would ease operations of marketers and help to reduce their costs, stressing that the association had long been calling for total deregulation of the sector.

Okoronkwo said that the new refinery would also boost Industrialisation in the country.

Mr Abiodun Adesanya, the President of Nigerian Association of Petroleum Explorationists, said the refinery would eliminate problems associated with fuel importation, create competition and generate employment opportunities.

He said that the success of Dangote Refinery was an indication that the Nigerian private sector could make commercial success of refineries.

Cape Business News, founded in 1980, is a specialist online and print platform that provides business readers with comprehensive news, with extensive coverage of general business trends, events, statistics, new products, services and projects.